Dave Ramsey urges caller not to join grandma’s scheme to deceive IRS about $1 million debt

Sarah and her husband rent a place in Los Angeles and are expecting their first child. But she called into The Ramsey Show because of a tricky situation involving her mother-in-law, homeownership and the IRS — one that caught host Dave Ramsey off guard.

Why? Because this caller’s situation includes $1 million in debt and potentially deceiving the IRS.

“Sarah, there’s just so much going on here that you’re not talking about or you don’t know,” Ramsey said in a clip posted July 12. “And it’s really, really scary. There’s a line of crazy running through this conversation.”

Here’s what was revealed during the exchange.

Sarah’s mother-in-law currently lives with the couple in their rental home. However, Sarah says her grandmother-in-law has offered to buy her mother-in-law a house in Sarah and her husband’s names so her mother-in-law “is not docked by her unpaid debts from the IRS” — and the three would continue to live together in the new house.

“She has a lot of unpaid debts and so grandma is trying to take care of her by providing a home,” Sarah said.

Her mother-in-law, 55, is going through a divorce and lost her job in September after a corporate restructuring. Right now she’s making DoorDash deliveries to bring in some extra cash.

She’s also apparently $1 million in debt.

When Ramsey asks why her mother-in-law is almost $1 million in debt, Sarah responded: “I don’t ask questions.”

Sarah says she adores her mother-in-law, but wants to know if this setup would be a wise decision and, if so, what they need to “have on paper.”

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Ramsey answered clearly: “I would not do this.”

He said, by doing so, “you are tying yourself to people you don’t ask questions about, permanently, and you are taking away her reasons for getting back on her own feet. This is not good. It is not healthy.”

He said Sarah’s mother-in-law needs to recover from the grief that comes from ending a marriage and experience “what’s known as a life — not hiding at her son’s house from reality.”